Which one of the following statements concerning the effects of fluctuating exchange rates on companies competing in foreign markets is true?

A)

Domestic companies trying to combat competition from foreign imports are hurt even more when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made.

Domestic companies under pressure from lower-cost imports are benefited when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made.

D)

Manufacturers that are exporting much of what they produce are benefited when their country's currency grows stronger relative to the currencies of the countries that the goods are being exported to.

E)

If the exchange rate of U.S. dollars for euros changes from $1.15 per euro to $1.25 per euro, then it is correct to say that the U.S. dollar has grown stronger.

5

Which of the following is/are not "valid" strategy options for entering and/or competing in foreign markets?

A)

An import strategy, a strategic alliance strategy, a profit sanctuary strategy, and a cross-market subsidization strategy

B)

A global strategy where a company uses essentially the same competitive strategy approach in all country markets where it has a presence.

C)

A localized multicountry strategy

D)

An export strategy and using strategic alliances or joint ventures with foreign companies as the primary vehicle for entering foreign markets

E)

A franchising strategy and a strategy of licensing foreign firms to use the company's technology or to produce and distribute the company's products

6

The advantages of manufacturing goods in a particular country and exporting them to foreign markets

A)

are seriously compromised by the potential for local government officials to raise tariffs on the imports of foreign-made goods into their country.

B)

are greatest when local consumers prefer products manufactured inside the country's borders.

C)

are weakened when that country's currency grows stronger relative to the currencies of the countries where the output is being sold.

D)

can be wiped out when that country's currency grows weaker relative to the currencies of the countries where the output is being sold.

E)

are largely unaffected by tariffs or quotas.

7

Using domestic plants as a production base for exporting goods to selected foreign country markets

A)

is usually a superior approach to competing in international markets.

B)

can be a competitively successful strategy when a company is focusing on vacant market niches in each foreign country.

C)

can be an excellent initial strategy to pursue international sales.

D)

is usually a weak strategy when competitors are pursuing licensing strategies.

E)

can be a powerful strategy because the company is not vulnerable to tariffs or quotas.

8

The advantages of using a licensing strategy to participate in foreign markets include

A)

being especially well suited to the exploit a profit sanctuary.

B)

being able to charge lower prices than rivals.

C)

enabling a company to achieve competitive advantage quickly and easily.

D)

being able to achieve lower costs than with a localized multicountry strategy.

E)

being able to leverage the company's technical know-how or patents without committing significant additional resources to markets that are unfamiliar, politically volatile, economically uncertain, or otherwise risky.

9

The advantages of using a franchising strategy to pursue opportunities in foreign markets include

A)

being particularly well suited to the international expansion efforts of companies with global strategies.

B)

having franchisees bear most of the costs and risks of establishing foreign locations and requiring the franchiser to expend only the resources to recruit, train, and support foreign franchisees.

C)

helping build brand awareness in international markets

D)

being well suited to companies who employ cross-market subsidization.

E)

gaining support from local governments in the form of subsidies and meeting local content requirements.

10

A "think local, act local" multicountry type of strategy

A)

becomes more appealing the bigger the country-to-country differences in buyer tastes, cultural traditions, and market conditions.

is generally an inferior strategy when one or more foreign competitors is pursuing a global low-cost strategy.

E)

employs essentially the same basic competitive strategy theme in all country markets.

11

A localized or multicountry strategy

A)

is generally preferable to a global strategy in situations where buyers are price sensitive because a "think local, act local" type of multicountry strategy is better suited to achieving low unit costs than a global strategy.

B)

is one where a company varies its product offering and competitive approach from country to country in an effort to be responsive to differing buyer preferences and market conditions.

C)

has two big drawbacks: (1) the bigger the country-to-country variations in strategy, the harder it is difficult to transfer a company's competencies and resources across country boundaries and (2) it does not promote building a single, unified competitive advantage.

D)

is generally inferior to a global strategy when it comes to pursuing product differentiation.

E)

Both B and C.

12

A "think global, act global" approach to strategy-making is preferable to a "think local, act local" approach when

A)

customer preferences vary significantly from country to country.

B)

it is necessary to delegate strategy making to local managers with firsthand knowledge of local conditions.

C)

plants need to be scattered across many countries to avoid high shipping costs.

D)

country-to-country differences are small enough to be accommodated with the framework of a mostly uniform global strategy.

local managers are given more latitude in adapting the global strategy approach as may be needed to accommodate local buyer preferences and be responsive to local market and competitive conditions.

E)

a "think global, act global" approach involves selling under a single brand worldwide whereas a "think global, act local" approach involves the use of multiple brands (often a local brand for each local market).

14

Which of the following is not a potential motivation for entering into strategic alliances or other cooperative arrangements with foreign companies?

A)

To gain wider access to attractive country markets

B)

To gain better access to scale economies in production and/or marketing

C)

To fill competitively important gaps in their technical expertise and/or knowledge of local markets

D)

To better enable the use of a "think global, act global" strategy and facilitate cross-market subsidization

Which of the following is not one of the ways in which a company can pursue competitive advantage by expanding outside its domestic market and competing multinationally?

A)

Locating value chain activities among various countries in a manner that lowers costs

B)

Pursuing blue ocean opportunities in the company's home country market

C)

Locating value chain activities among various countries in a manner that helps achieve greater product differentiation

D)

Cross-border coordination of its activities in ways that contribute to building a competitive edge

E)

Employing a profit sanctuary strategy to wage a strategic offensive.

16

Multinational competitors tend to concentrate activities in a limited number of locations when

A)

prices and competitive conditions are strongly linked across country markets to form a world market.

B)

there are significant scale economies and/or steep learning curve effects associated with performing certain activities in a single location, costs of performing the activity are lower in particular geographic locations, and certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantages.

C)

the risk of fluctuating exchange rates is very high.

D)

host country governments can be persuaded to erect high tariff barriers to protect the company's operations from foreign competitors and when it is not imperative to be responsive to buyer needs and competitive conditions in each country.

E)

competitive conditions make it infeasible to employ a profit sanctuary strategy or an export strategy.

17

Dispersing the performance of value chain activities to many different countries rather than concentrating them in a few country locations tends to be advantageous

A)

when high transportation costs make it expensive to operate from central locations.

B)

whenever buyer-related activities are best performed in locations close to buyers.

C)

if economies of scale are essential to achieving acceptable production costs.

D)

Both A and B.

E)

None of the above.

18

A country (or geographic region) becomes a company's profit sanctuary when

A)

a majority of the company's customers are in that country.

B)

that country (or region) is where a company's prices are the highest of any country where it sells its product/service.

C)

a company pursues a "think local, act local" type of multicountry strategy in that country.

D)

the company earns substantial profits from sales in that nation due either to its strong or protected competitive position.

E)

the company is the market share leader in that country market.

19

Profit sanctuaries are valuable competitive assets because

A)

they enable a company pursuing a "think global, act local" type of strategy to be more successful.

B)

a domestic competitor with multiple profit sanctuaries can wage and generally win a competitive offensive against a global competitor whose profits are scattered across many different countries.

C)

they provide the financial strength to support strategic offensives in selected country markets and can help fuel a company's race for global market leadership.

D)

without having at least two profit sanctuaries a company is virtually precluded from competing globally.

E)

they enable a company pursuing a global strategy to compete on an equal footing with companies employing a multicountry strategy.

20

Which of the following is not a typical option that companies have to consider to tailor their strategy to fit the circumstances of emerging country markets?

A)

Develop new sets of core competencies that allow a company to offer value to consumers of emerging markets in ways unmatched by rivals

B)

Prepare to compete on the basis of low price

C)

Be prepared to modify aspects of the company's business model to accommodate local circumstances (but not so much that the company loses the advantage of global scale and global branding)

D)

Try to change the local market to better match the way the company does business elsewhere

E)

Stay away from those emerging markets where it is impractical or uneconomic to modify the company's business model to accommodate local circumstances